Ready for the Next New Deal?

Don't be surprised if the U.S. decides to launch the Next New Deal in the next few years. And if it does, will your company be prepared for a tighter labor market and renewed growth?

November 29, 2011

Don't be surprised if the U.S. decides to launch the Next New Deal in the next few years. And if it does, will your company be prepared for a tighter labor market and renewed growth?

When I say a Next New Deal may be on the horizon, I mean there are increasing signs that the way out of our prolonged economic slump may be a massive federal jobs program. Something on the scale of Franklin Delano Roosevelt's Works Progress Administration—the New Deal program that employed millions of people to build roads, parks and schools.

What signs am I talking about? First, the economic slump and jobless recovery have lasted a long four years. Unemployment officially clocks in at 9 percent, and the broader figure that includes those who've stopped looking for a job or are stuck in part-time positions is 16 percent—translating to more than 25 million Americans.

There's growing recognition that private-sector companies aren't going to get the country back to work any time soon. Republican leader John Boehner of Ohio speaks of "job creators"—businesses—going "on strike" to protest regulations and other government policies. It may not be that dramatic. Companies have been able to squeeze more productivity out of their current workforce. They have been locating more jobs overseas, including critical research and development positions. And they are hoarding cash to get through any additional economic shocks—a wise move in the view of business guru Jim Collins.

In this climate, some unorthodox thoughts are springing up. Start with the Occupy movement, and its claim that the U.S. economy does not serve the vast majority of Americans. Then there are maverick individual voices. Last year, former Intel Corp. CEO Andy Grove published an essay calling for a "job-centric economic theory" and a tax on the product of offshored labor. While not advocating specifically for a new Works Progress Administration, Grove broke ranks with the common corporate view that government is more problem than solution.

And last week, one of the most emailed stories at the New York Times was an essay by sociologist Herbert Gans titled "The Age of the Superfluous Worker." Gans noted a number of factors that have led to excess workers over the years, including less-deadly wars, fewer poverty-related deaths, offshoring and automation. The trends carry grave risks, he warned. "A society that has permanently expelled a significant proportion of its members from the work force would soon deteriorate into an unbelievably angry country, with intense and continuing conflict between the have-jobs and have-nones," Gans writes.

Among his prescriptions: "America will have to finally get serious about preserving and creating jobs—and on a larger, and more lasting, scale than Roosevelt's New Deal."

Oh, I know that a Next New Deal has no chance of getting through Washington in the near term. But just as the Tea Party and the Occupy movements sprung up quickly to change the terms of debate, I wouldn't be surprised if a movement builds in the coming years for the sort of public works programs that Gans and others advocate: more teachers, infrastructure improvements, and more research and development into clean energy technology.

What would massive government hiring mean to private-sector employers? First and foremost, it would mean a tighter job market. The companies who have established themselves as good employers—ones that are caring, inspiring and data-driven in their management—will have a much easier time attracting and retaining workers. Those that have taken advantage of employees during this slack labor market by working them too hard or skimping on compensation may find themselves facing higher turnover and fewer job takers.

A Next New Deal also would likely goose economic activity overall. Again, those companies that have short-changed employees for short-term benefit are at risk. They will not have an engaged, capable workforce ready to charge forward and seize market opportunities. Employers with a longer-term perspective on employees, by contrast, will be poised to race ahead with more-enthused, better-trained teams.

So if and when America puts itself back to work, will your organization be ready?